If you have run Dangermouses install script or have enabled repository protection yourselt you are not going to get any updates because the protection plugin for yum sees the new key repo as conflicting with the update repo. the way to get around this is very easy

open all your fedora repo files in /etc/yum.repos.d and make sure the protect=yes line is not present in the fedora.repo, fedora-updates and fedora-updates-testing repos

this will cause your update to fail i had to go through and do this myself. If you want to protect the new repos then open the ones with .newkey as part of the file name and add that line protect=yes to the file under each repo

Alright, I went brute force and reinstalled Fedora 9. After updating the system, the same issue cropped up again - /etc/grub.conf was not getting modified and I was getting the dreaded failure during the kernel upgrade.

Not wanting to give up, I modified /etc/grub.conf to that shown below, and I have been able
to boot the recent kernel. I still don't know why the kernel upgrade is not modifying /etc/grub.conf.

I edited inittab to boot to runlevel 3 for other reasons.
Logged in as root, did some stuff...then having already removed kernel-x.3-29.fc9...and headers. I did a yum update as root from runlevel 3 and all was good.

No errors...postcript ran without problems initrd.x.img was created and grub.conf was updated.